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Balloon Payment

A large payment of principle due as the final payment in a mortgage. In standard mortgages the principle is paid down gradually and evenly over the entire amortization period. In a mortgage with a Balloon Payment, the principle is paid off in relatively small small amounts over the period of the loan until the final payment, where half or more of the principle may be left to be paid back at once. Since normally the Operating income from a property will not be large enough to make such a large payment of principle, a mortgage with a Balloon Payment assumes that the owner will sell or refinance the property in order to make the Balloon Payment.

Term in Russian